Seeing the Trees for the Forest

By

L.A. Little

| Apr 23, 2012 | 7:05 AM EDT

Many people approach the market using a bottom-up strategy while others do the opposite -- top-down. I would have to consider myself in the latter camp, because my research has unequivocally shown that an individual stock's trend is affected by the stock's sector trend and the general market trend. In my upcoming book due out this fall, I share this and many other data points. The effect of the trends of higher-level instruments is necessarily significant and cannot be ignored. As a trader, you have to trade the odds, and the odds for individual trades are altered in this meaningful way.

So, what is the current general market trend? Short-term, it is either bearish or sideways, depending on which market you are looking at, and the same is true of the sectors. What hasn't happened yet is a bleed into the intermediate-term trends. This is nearing, but it hasn't happened quite yet. Given this fact, the market is range-bound, most likely with the top of the range reasonably defined but the bottom yet to be so defined. That says you have to respect that further downside is possible in the coming days and weeks....576 more words left in this article. To read them, just click below and try Real Money FREE for 14 days.

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